WilliamL. Watts

SAN FRANCISCO (MarketWatch) — Oil futures cleared the $100-a-barrel level on Wednesday to close at their highest level in more than a week after U.S. data showed crude inventories unexpectedly fell back from a record level.

Crude oil for June delivery
US:CLM4
rose $1.27, or 1.3%, to settle at $100.77 a barrel on the New York Mercantile Exchange. Prices haven’t settled above $100 or closed at a level this high since April 29, based on the most-active contracts.

European benchmark June Brent crude
UK:LCOM4
traded on the ICE Futures exchange, also gained $1.07, or 1%, to settle at $108.13 a barrel.

Crude stockpiles fell 1.8 million barrels for the week ended May 2, according to data from the U.S. Energy Information Administration released Wednesday and a separate report from the American Petroleum Institute issued late Tuesday. Analysts polled by Platts were looking for a climb of 1.3 million barrels.

The supply decline was the first seen in several weeks, said John Macaluso, research analyst at Tyche Capital Advisors.

Commercial crude inventories stood at 397.6 million barrels in the latest week, EIA data show. For the week ended April 25, total supplies were at 399.4 million barrels, which was the largest weekly total based on EIA records going back as far as late August 1982.

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Crude inventories unexpectedly fell back from a record level, data show.

Stocks at the Nymex delivery hub at Cushing, Okla., fell by roughly 1.4 million barrels.

“A key takeaway from the report was the continued decline in Cushing stocks,” said Tyler Richey, an analyst for the 7:00’s Report, which offers daily markets commentary. “The dropping inventories at Cushing is obviously a concern because of the required minimum levels that must be maintained in the tanks before the risk of explosion greatly increases.”

The EIA also said that gasoline supplies rose by 1.6 million barrels, while distillate stockpiles declined by 400,000 barrels. Gasoline stockpiles were expected to fall by 900,000 barrels, while distillates, which include heating oil, were seen up 1.5 million barrels, according to the Platts poll.

“Despite a draw in crude-oil inventories, production levels remain at a very high level — adding to EIA data that showed a larger-than-expected build in unleaded gasoline, Macaluso said.

On Nymex, the June contract for gasoline
US:RBM4
added 3 cents, or 1.1%, to end at $2.92 a gallon, while June heating oil
US:HOM4
tacked on 4 cents, or 1.4%, to $2.93 a gallon.

The supply data took away some attention from developments in Ukraine, which overall on Wednesday, likely helped ease some worries about supplies from Russia, for now.

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Russian President Vladimir Putin on Wednesday said he is prepared to discuss a “way out” of the situation in Ukraine with the head of the Organization for Security and Cooperation in Europe.

But news reports said fresh fighting broke out in Ukraine as government forces pushed into the pro-Russian city of Mariupol. Ukrainian troops temporarily seized control of the city hall from pro-Russian activists but then withdrew, with pro-Russian activists then retaking control of the building, reports said.

As far as geopolitical headlines, there seems to be little progress in any resolution of the ongoing violence between Russia and Ukraine, said Macaluso. “The same goes for the Libyan oil fields, which have been shut down by rebel protesters as they refuse to cooperate with their new prime minister.”

Also on Nymex Wednesday, prices for natural gas retreated from a sizable 2.4% gain in the previous session, with the EIA on tap to report its weekly data Thursday on supplies of the fuel. June natural gas
US:NGM14
fell nearly 6 cents, or 1.2%, to $4.74 per million British thermal units.

Analysts polled by Platts expect the EIA to report a climb of between 69 billion cubic feet and 73 billion cubic feet for th week ended May 2.

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